New Property Law Is Driving Growth In Turkey and Istanbul

Turkey has the only city in the world (Istanbul) that stands on two continents, so such a cosy position means it is a good idea that the country gets on with its neighbours and particularly some of its near neighbours if only for reasons of trade.

Falling out with the neighbours is not really a good idea for Turkey as we have seen recently with the border skirmishes with Syria. This grumbling conflict aside, the Turks have a reputation for being welcoming to their visitors. It is even a national tradition that a stranger on the doorstep is considered a guest from god and should be made to feel welcome.

So it should have come as no great surprise that Turkey has opened up its property market to investors from 183 countries. This has already started to attract some of its near neighbours from the Gulf states who have been making the most of their new found freedom in the country.

The new property law in Turkey came into effect back in May 2012, yet even before this milestone, foreigners rushed in to purchase $1.1 billion worth of property in the country. If this doesn’t sound significant, it was actually four times more property than 2011.

Many thought at the time that this was a temporary surge of investor interest in Turkish property and that it would soon pass when those investors would sell on to other investors when the law was approved. Yet there is little evidence of this happening at the moment with the FT only this month reporting a property development in Istanbul has already received $400m from Gulf investors even before launch.

It is not clear if it is by accident or design that just as the Arab Spring is playing out its final conflicts, Turkey is opening its doors to many of its Arab neighbours. In fact they seem to be doing it with open arms and with few safe options for their holidays, many Arabs are only too happy to start moving in where they feel comfortable to invest.

This is not to say that Arabs have any fear of investing in other countries, it is just that compared to elsewhere, cities like Istanbul offer a much better alternative to overpriced cities in Western Europe.

The last time Istanbul appeared on a list of the world’s most expensive cities to buy property, it was still well down in 30th place. This means that it is not just investors from the Gulf who will be finding the opportunities to be had in Istanbul exciting at the moment. Istanbul property offers an attractive alternative because there is so much room for growth and the investment numbers stack up.

The national economy too is still growing at a respectable rate even after this year’s engineered slowdown. I have a funny feeling that this property boom in the new, more open, Turkey still has some way to run as a result.